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Modern Telecommunication ... The Very Basic.

I have for some time worked on training notes (eventually a book) that particular targets the un-initiated or persons / companies interested in understanding how Telco works and thinks. Particular focusing on Economics and Business Models.

These notes where used in a recent training I gave in Myanmar and as such many of the examples are particular to Myanmar.

For the initiated this is likely going to be too easy and sometimes even feel like cheating (just a bit).

Stay tuned as I will be updating these particular slides frequently and as I tailor make them for particular requests or interests.

Superb and comprehensive introduction (?) to the field. Is it possible to get a copy of it as I'm struggling in my company to introduce same topics correctly (... for Dummies) for them to be able to take the right decisions about their telecom strategy.

6.
Minutes, Bytes & bits per second.
6
• Voice Usage is well defined & understood, it is a capacity & cost driver!
• Calls measured in minutes (or Erlang).
• Network Impact per time unit of voice usage is “always” the same (i.e., fixed bandwidth or resource allocation).
• Voice Usage is well defined & understood, it is a capacity & cost driver!
• Calls measured in minutes (or Erlang).
• Network Impact per time unit of voice usage is “always” the same (i.e., fixed bandwidth or resource allocation).
Voice Minutes
• Byte B is a measure of total information consumed; ∝ ∑ ; …
, rb is the supplied network bit rate in bits per second.
• Its a volumetric unit of data consumption and similar (in principle) to a Voice Minute.
• Network impact per time unit of data usage can vary enormeously (i.e., variable bandwidth or resource allocation).
• Byte B is a measure of total information consumed; ∝ ∑ ; …
, rb is the supplied network bit rate in bits per second.
• Its a volumetric unit of data consumption and similar (in principle) to a Voice Minute.
• Network impact per time unit of data usage can vary enormeously (i.e., variable bandwidth or resource allocation).
Byte (8 bits)
MB, GB, TB, …
Note ∝ ∑ ∆ =
, rb is constant. e.g., 12.2 kbps
• bits per second is a fundamental measure of the information rate.
• For data consumption the bit rate can (and often will) vary significantly between one and another instant of time.
• Networks are planned according with the expected maximum gross demanded bit rate arising from all users.
• bits per second is a fundamental measure of the information rate.
• For data consumption the bit rate can (and often will) vary significantly between one and another instant of time.
• Networks are planned according with the expected maximum gross demanded bit rate arising from all users.
bits per second
kbps, Mbps, Gbps
Byte is NOT a capacity or cost driver!!!
Bits per second is the capacity or cost driver!!!
Wiki

9.
Circuit-switched connections.
Circuit Switched (CS) Connections
A B
- End-2-End well defined circuit fully reserved
until user (or network) breaks connection.
- There is no changes to the circuit path
throughout a call.
- Capacity is reserved 100% throughout a call,
irrespective of activity.
- Highly reliable with less delay.
- If path is broken (due to quality or outage),
service is lost and needs to be built up again.
- It tends to be in-efficient in its use of
switching and transmission resources.
- Public Switching Telephony Networks (PSTN)
are circuit switched in nature.
- Today many PSTNs have migrated to VoIP and
(so-called) Next Generation (NG) IP switching
networks.
Communication paths
usually called circuit.
Wiki
Network resources 100% reserved when connection established.
No statistical advantage from variation in usage..
Connection establish
from A to B and kept
until user breaks it.

10.
Packet-switched connections.
Packet Switched (PS) Connections
A B
- Uses Content (e.g., voice or data) broken up
in so-called (IP) packets & send over the
network.
- The path is changed based on quality, traffic
and priority.
- Network resources only used when user
packets send over the network.
- Can be very reliable although more delay
sensitive than circuit switched.
- Packet prioritization possible which can
provide almost same quality as a circuit
switched connections.
- PS Networks tend to be very efficient due to
the statistical nature of packet transmission.
- Most modern switching networks (e.g., LTE,
3G HSPA) are PS-based.
Wiki
Network resources used only when user uses.
Packets (of use) statistically distributed.
Packets of use can be transmitted
via many different paths
Uses broken down into
(IP) packets and send
into the PS network.
All (IP) packets re-assembled
(re-built) into a continues
stream of content.
123
1 1
1
1
2
2 2 2
3
3
3

11.
What brings meat to your noodles?
(in Europe: we would say what brings the butter on your bread).

13.
Telecommunications in General
Tele-communications is the exchange of information
(bits) over a distance by electronic or optical means.
A complete, single telecommunications connection
consists of at least two devices, each device
equipped with a transmitter and a receiver.
Ancient Greek
means at a distance.

14.
We are (almost) all Mobile
High GDP
APAC
Europe
North
America
APAC EMEA
Latin
America
Sources: United Nations, Department of Economic & Social Affairs, Population Division. . Mobile Penetration is based on Pyramid Research and Bank of America
Merrill Lynch Global Wireless Matrix Q1, 2014. Index Mundi is the source for the Country Age structure and data for %tage of population between 15 and 64
years of age and shown as a red dotted line which swings between 53.2% (Nigeria) to 78.2% (Singapore), with an average of 66.5% (red dashed line).
Mobile Penetration Urban Population
2013

15.
Most urban areas have
3G Mobile Broadband
High GDP
APAC
Europe
North
America
APAC EMEA
Latin
America
Sources: United Nations, Department of Economic & Social Affairs, Population Division. . Mobile Penetration is based on Pyramid Research. Index Mundi is
the source for the Country Age structure and data for %tage of population between 15 and 64 years of age and shown as a red dotted line which swings
between 53.2% (Nigeria) to 78.2% (Singapore), with an average of 66.5% (red dashed line).
3G Penetration Urban Population Urban Area
2013

24.
Important drivers to consider.
Gordon Moore’s (co-founder of Intel) law:
transistor count double every two years.
GPU particular important for
development of Artificial Intelligence
& Virtual/Augmented Reality Apps.
The higher the
number of
Transistors the
higher the
performance
+10Yrs
× ~ 100

25.
Important drivers to consider.
Average
Top-50
Max
Top-50
On average over period a
factor 2 in power reduction
per year has been achieved.
Very few
Data points
Approx. factor 10
improvement per 5 years
On average 20+%
improvement per year

26.
Important drivers to consider.
Note: after 2005 GPU outperform the CPU processing
power in terms of GFLOPS so maximum performance
should be used to calculate the initial price!
Ca. factor 6
reduction per year
In cost of computing!

27.
Important drivers to consider.
Last 5 years cost of Flash
has reduced a factor 10+
Last 3 years cost of SSD
has reduced a factor 2.5
Last 5 (10) years cost of Memory
has reduced a factor 2.8 (50+)

29.
Access technologies development.
Caution: Above does not consider contention ratio (e.g., 1:32 or 1:64), concurrent user demand, assuming vastly different
bandwidths to get to the speed, nor does this consider that the technologies have very effective ranges at optimal speed
plotted above. So it is a bit of an apple and orange comparison!
Last 10 years
more than
× 1,000
Improvement
in user speed

30.
Last 10 years.
The amount of computer power performance
quantum leaped new applications (not possible prior).
The cost of computing and storage has reduced dramatically
Becoming cheap and un-locking boost in software-driven innovation.
Access technologies have improved with at least factor 10 in user speed
allowing for fast low-latency access to computing and storage on the go.
What before had to be built in expensive customized hardware can now be
supported by software on cheap off the shelf hardware.

31.
Enablers
Drivers
Transistor
Count
×1,000 over period
Computing
cost
~ 1/6 per year
Last 10 Years
Cost of
Storage
~ 1/50 over period
Storage
Capacity
×1000 over period
Cellular Access
Speed
×1000 over period
Cloudization
Virtualization
NFV
SDN
SW replacing HW
functionalities
Data
DemandSW as a Service
Storage
Higher performance for much less cost
Technology
Progress

64.
Classical cellular pricing.
The old world thinking.
Myanmar Mobile Data Pricing:
Old school data pricing philosophy where data usage comes on-top of
what basic services (e.g., Voice & SMS) a customer has chosen.
Telenor most sophisticated with quality differentiated price depending
on speed range (i.e., up-to 500 kbps and up-to 2 Mbps). Neither MPT
or Ooredoo have quality differentiated pricing.
MPT appears to copy Telenor though does have a high cap data plan
(6.5GB) for 25 US$ (ca. 3.85 US$ per GB).
Telenor has the cheapest data prices at 3.7 US$ per GB if customer is
happy with up-to 500 kbps.
Group Study
Most expensive!
Highest Data Capacity per Customer
But Not the best in Quality class
US$ per GB

73.
Road analogy of frequency & bandwidth.
Channel
Bandwidth
Width
of the Road~ The wider the road the more cars
can I support simultaneously
BChannel = WRoad
Coverage Length of
Carrier Frequency
L  1 / Fc
~
Length of the road
with a given Width
How long a distance
can I support a given
traffic volume of cars
How long a range can I
support a given traffic
demand of data
The wider the channel bandwidth
the more data traffic can I support

81.
Quiz
1. What carrier frequencies are the most valuable for coverage?
a) Low frequencies (<2100 MHz).
b) High frequencies (>1800 MHz).
c) Carrier Frequency itself is not valuable, bandwidth is the valuable property.
2. Which statements below are correct? (could be more than one!)
a) FDD divides the frequency spectrum up in individual codes.
b) FDD stands for Forestry Defence Department.
c) FDD divides a frequency spectrum into two bandwidth parts, with a frequency
separation between uplink use and downlink use.
d) TDD stands for Time Division Duplex.
e) In China TDD is the most popular implementation of LTE.
f) FDD is better than TDD.

83.
Spectrum efficiency.
How many bits per second can I transport per Hz of bandwidth.
Frequency in Hz
Illustration (idealized)
Channel
Bandwidth
B in Hz
Spectrum Efficiency =
Information rate (bits per
second) that can be support
by a given technology and
available bandwidth in Hz
In general, the higher spectral efficiency the better technology!

84.
Road analogy of spectral efficiency.
Width
of the Road
WRoad
5 cars per second
Per
Width of Road
Old Road
10 cars per second
Per
Width of Road
Safe
distance
Width
of the Road
WRoad
New Road Next Generation Road
21 cars per second
Per
Width of Road
Width
of the Road
WRoad
Technology
Improvement
Technology
Improvement

93.
UMTS Euphoria 2000.
- In March 2000 Mobile industry paid ca. 35 Billion
US$ for 3G spectrum (record).
- Almost $5 per MHz per pop.
- ×3 the total UK mobile revenue in 2000.
- ×8 the total UK mobile Ebitda in 2000 (estimate).
- On-top they would need to invest at least 20
Billion US$ in 3G network infrastructure.
- They would need minimum 8 – 10 Billion US$ FCF
per year (over 10 years) to reach an NPV 0.
- ×12 the total UK mobile FCF in 2000 (estimate).
- At least 15+ years to breakeven on cash.
- The internal business cases (at the time) would
have had to be very optimistic to finance what
was paid for the spectrum.
- Value should have far exceed the 35 Billion
US$ paid for spectrum including
deployment investments.
- In July 2000 Mobile industry paid ca. 2.0 Billion US$
for 3G spectrum.
- Ca. $2 per MHz per pop.
- Approx. the total NL mobile revenue in 2000.
- ×2.5 the total NL mobile Ebitda in 2000 (estimate).
- On-top they would need to invest at least 1.5 Billion
US$ in 3G network infrastructure.
- They would need minimum 0.5 Billion US$ FCF per
year (over 10 years) to reach an NPV 0.
- Approx. the total NL mobile FCF in 2000 (estimate).
- The internal business cases (at the time) was
optimistic but not as aggressive as in UK.
- Value should have far exceed the 2 Billion
US$ paid for spectrum including deployment
investments.
Telenor paid $500M
for 2×5 + 2×10 MHz
$0.31/MHz/pop (1/6 NL)
GDP per Capita is 30× lower

94.
Quiz
1. A Technology using 900 MHz covers an area
a) Worse than for a frequency of 1800 MHz?
b) Better than for a frequency of 1800 MHz?
c) Too little information to answer question?
2. Which of the following set of parameters are important for providing cellular network
capacity?
a) Frequency, Number of rainy days, Number of Sites.
b) Number of Sites, Bandwidth and Number of Customers.
c) Number of Sites, Number of bits per second per Hz available from deployed technology and
Available Spectral Bandwidth.
3. My LTE customers demand 100 Giga bit per second (Gbps) in downlink. I
have 2 x 10 MHz available for LTE with an effective  of 2 bps/Hz/unit. How
many units do I need to support the demand?
a) 500 capacity units.
b) 250 capacity units.
c) 5,000 capacity units.

95.
Facebook Drone Coverage
The Basic Economics
“The Drone Coverage Network is an exponential technology in the sense that it has the ability to
Disrupt existing terrestrial-based cellular coverage networks
by a factor of 10 or more on TCO and deployment-time.”
“Facebook’s ambition is to built 10,000 Acquila drones which could more than easily
cover all land based surface area.”

101.
Quiz (1 of 2)
• By 2024 27 Billion Global IOT connections are expected.
• World population is expected to be 8 Billion with ca. 3.5 people per household (HH).
• Planet Earth total surface area is 510 Million km2.
• Land area is ca. 150 Million km2
• Ca. 75 Million km2 is habitable.
• Max. 15 Million km2 is covered by urban development.
1. How many IOT connections do you have per HH and per km2 considering the total surface
area of Planet Earth.
2. How many IOT connections do you have per km2 considering only land area.
3. How many IOT connections do you have per km2 considering only urban development.
4. Does the amount of IOT devices per Household seem realistic? Compare with the expected
number of mobile devices per HH?
5. Assume that a typical urban cell site area of is ca. 3 km2 how many IoT connections do you
get that a cell site would be required to support?

102.
Quiz (2 of 2)
• By 2024 27 Billion Global IOT connections are expected.
• On average an active IOT connection will use 140 Bytes (approx. size of SMS).
• On average an IOT is active 60 times per minute (60x24x7x365:-).
1. How many Mega Bytes will an IOT connection consume per day?
2. How many Mega Bytes will an IOT connection consume per month?
1. Compare that to the global average smartphone data consumption 2015 (ca. 1,200 MB).
3. How many Giga Bytes will an IOT connection consume per year?
4. What is the total amount of Exa Bytes (i.e., Billion Giga Byte) consumed by of all IOT
connections?
5. If by 2024 the total data consumption excluding IOT is in the order of 400 Exa Bytes (i.e.,
400 Billion Giga Bytes), what would the proportion of IOT data consumption be if included
in the total data consumption?

103.
Global IoT growth projections.
2014 – 2024.
~ 2 IoT Connections
per 3 people
~2.5 IoT connections
per Household
~13 IoT connections
per Household
Note: global pop per HH is ~3.5, world surface area 510 Million km2 of which ca. 150 million km2 is land area of which ca. 75 million km2 is habitable. 3% is an upper
limit estimate of earth surface area covered by urban development, i.e., 15.3 Million km2  300+ IoT per km2 in 2014 and 1,700 IoT per km2 in 2024.
~33 IoT connections
per km2 land area.
~180 IoT connections
per km2 land area

112.
Benefits of cloudization.
Networking
Storage
Servers
Virtualization
Operating System
Middleware
Execution
Data
Application
Legacy
All Internally
Managed
Networking
Storage
Servers
Virtualization
Operating System
Middleware
Execution
Data
Application
Infrastructure
as a Service
IaaS
Networking
Storage
Servers
Virtualization
Operating System
Middleware
Execution
Data
Application
Platform
as a Service
PaaS
Networking
Storage
Servers
Virtualization
Operating System
Middleware
Execution
Data
Application
Software
as a Service
SaaS
Source: http://news.microsoft.com/download/archived/presskits/cloud/docs/The-Economics-of-the-Cloud.pdf
Internally managedInternally managed
All being managed
by cloud provider(s)
It is possible to mix
cloud providers.
It is possible to mix
cloud providers.
Could be from
different provider

113.
Basic business model for the cloud
Platform
as a
Service (PaaS)
Infrastructure
as a
Service (IaaS)
Software
as a
Service (SaaS)
Pay as you Use Pay as you Grow
Network
as a
Service (NaaS)
Customers can save or altogether avoid IT Infrastructure and substantially reduce need of IT Staff

114.
The Top Cloud Providers.
As of 2014.
Infrastructure
as a Service (IaaS)
Platform
as a Service (PaaS)
Software
as a Service (SaaS)
Storage
as a Service
Security
as a Service
X as a Service
(XaaS)
Other Cloud Service examples

119.
Caution on the Business Case
of Cloud & Virtualization.
Old
Legacy
DC Design
with
1:1
physical
server
to Services
(non-
virtualized)
Modern
DC Design
Fully
virtualized
60% to 70%
Cost reduction*
(*) Comparison should always be based on absolute cost at the same occupancy or efficiency rate. Be careful about relative TCO metrics only unless you can
check the absolute cost level as well. See also Cisco “The Economics of Cloud Computing” by Bill Williams.
Un-negotiated, as-is & older
HW (i.e., no optimization)
Newly negotiated, newest HW,
Optimized (high) efficiency
• Do understand your baseline!
• What is the Baseline Cost including TCO (Total Cost of Ownership)?
• What are the limits to optimization within legacy network?
• Include the potential of new sourcing.
• What is the cost per service? E.g., Server TCO, Storage TCO, Maintenance per Service, etc…
Modern
DC Design
Virtualized
Optimized
NG
DC Design
Virtualized
Optimized
< 20% Cost reduction*
At this time and age the above
scenario is relative rare.
At this time and age the above
scenario is the more normal one.
Newly negotiated, newest HW,
Optimized (high) efficiency
Un-negotiated, as-is & older
HW (i.e., no fully optimization)

121.
Telco Cloud & Virtualization Economics.
Telco cost structure impact of migrating to cloud & virtualization.
Capex impact:
• Maximum 40% of Telco Capex likely to be positively impacted by Cloudization &
Virtualization (i.e., IT & Core).
• Of the 40% approx. 50% would be infrastructure & the remaining part Software-
driven (new development 20% & maintenance 80%).
• Transport (i.e., Backbone/interconnect) cost (up-to 20%) could increase.
• Really depends on the degree of centralization & whether traffic remains in country or
needs international transport.
• Upfront investment (unless outsourced to 3rd party) would be required to design
and build DC to host Telco IT and Core Network functionalities.
• Assuming that Telco builds up own Cloud capabilities: overall Capex benefits
(avoidance) should be expected to be relative minor as premium HW is replaced by
premium SW (although HW cost is reduced, the cost of SW tends to increase) and
the upfront investment to prepare DC for legacy migration cloud/virtualization.
• On IT specific Capex max 40% avoidance should be expected compared to a legacy
IT environment wo virtualization (i.e., Greenfield comparison).
• In complete Outsourcing model substantial part of the relevant Capex (i.e., 40%)
will disappear although additional transport invest may be required.
potentially
negatively
impacted
Potentially
negatively
impacted
Opex impact:
• Maximum 25% of Telco Technology Opex expected to be impacted by
Cloudization & Virtualization (i.e. IT & Core).
• Complete Outsourcing model: One need to consider the total cost including
the benefits of Capex Avoidance (see above). While part of the legacy Opex
should be expected to reduce (e.g., from personnel, energy, other) 3rd party
service cost would add Opex to the cost structure.
• Depending on how efficient legacy IT & Core were operated minor overall Opex
saving (<10%) could be expected.
• Assuming that Telco builds up own Cloud Capabilities: One should not expect
more than net 10% to 20% Opex savings on the relevant Opex (i.e., 25%) and
only after complete migration. During migration overall Opex is likely to be
higher than legacy only.
Group Study

122.
Summary
Relative benefits to cost structure of cloudization & virtualization.
E-commerce businesses can avoid own IT infrastructure & need for substantial IT
staff, benefit from economical PAYG&U* licensing (i.e., very low barrier to start-up).
Legacy Data Center Providers & large non-Telco ISPs leverage scale of their
existing DC infrastructure (i.e., increased business on same infrastructure).
Telcos, where IT & Core Network cost structure is relative minor, will achieve
improvements on relevant total cost although overall it might not be a big change.
(*) PAUG&U: Pay As You Grow and Use.
Highest absolute economical benefits of cloud & virtualization are achieved in
Greenfield Scenarios with pure IT environments.

148.
Subscriber Identify Module (SIM).
1991 20122008
• The SIM card is an integral part of the overall GSM System Architecture as well as
any cellular standard evolved from that such as UMTS and LTE.
• Without a working SIM the mobile device will not be able to connect to the
network (beside for emergency services).
• The SIM card uniquely identify the subscription & telephone number (MS-ISDN)
upon which billing or rating/charging (for prepaid) is based.
• Note 1 subscriber can have several SIM cards (and of course devices).
SIM securely store the user’s unique id associated the
particular cellular network:
IMSI: International Mobile Subscriber Identity.
IMSI =
MCC Mobile Country Code, e.g., 414 for Myanmar.
+ MNC Mobile Network Code, e.g., 05 for Ooredoo.
+ MSIN Mobile Subscription Identification Number (10 digit).

151.
Quiz
1. What initially made GSM so attractive to consumers?
a) Cool handsets (e.g., iPhone)
b) Wireless & enabling mobile.
c) You got your own SIM card.
2. Which statements below are correct? (could be more than one!)
a) GSM is based on TDMA and FDMA (8 timeslots for each 200 kHz carrier).
b) GSM was developed because engineers had nothing better to do.
c) GSM spectrum structure is TDD (time division duplex).
d) GSM strived for higher spectral efficiency (supporting large amount of customers)
using digital technology.
e) GSM introduced the SIM in order to improve identification of customers and provide
better security against unlawful tapping of conversations.
f) SIM stands for Subscriber Identity Module and uniquely identify the customer.
g) GSM voice services are based on circuit switched technology.
h) With GSM a unified mobile technology was created with sufficient scale and
economics that it would be affordable for most consumers and operators.

174.
LTE status as of End-2015.
Source: http://gsacom.com/paper/spectrum-bands-used-in-480-commercially-launched-
lte-networks/
More than half
(552 Million)
of that was
gained during
2015!
Comprising
157 Countries.
54+% from APAC

178.
FDD-LTE commercial launches.
GSM legacy band of 2×75 MHz usually
easy to re-purpose.
(all-round coverage, good capacity)
Lots of spectrum (70MHz) available,
usually virgin spectrum.
(good for small cells & urban coverage
with good capacity)
Relative scarse but in cellular sense
usually virgin spectrum.
(very good coverage, limit capacity)
In use for UMTS and thus relative
little capacity available now
(overlay coverage to existing UMTS)
Asia and South America.
old broadcast / analogue tv spectrum
(very good coverage & good capacity)